We haven't heard too much about Lewis Charles. Can you give us some background?
Stavros Loizou: That's probably because we were called SFS International Securities until March 2005. We were established in September 2000 as a niche player based in North London. The company was founded by Andy Charalambous and me to fill what we saw as a void created by the arrival of 'on-line execution only dealing'. Fortunately for us, our entrepreneurial approach to business meant that we could take on new and innovative products straight away such as contracts for differences (CFDs). This helped us expand our business in the downtrend and we were in a position to grow within a short space of time.
How did that expansion take shape?
Stavros Loizou: The firm underwent a management buyout in December 2004 and raised additional working capital to enable growth. As part of the MBO we changed our name to Lewis Charles Securities and moved to new headquarters in Chiswell Street, EC1. We have secured key personnel and jumped from a headcount of 15 to 45 in a relatively short period of time.
Do you still regard yourselves as equity brokers?
That describes just one part of our business. The second is corporate finance. We specialise in advising companies with a market value of up to £100 million that are listed on or wish to join the Alternative Investment Market (AIM). This market has shown impressive returns in the last three years and so gives our clients opportunities to invest at the early stages of growth. Our current pipeline includes property funds, gold and oil exploration companies and the retail sector.
Our third division is asset management. We cater for private client portfolios up to managing listed funds, such as the Lewis Charles Sofia Property Fund that was listed in September 2005. We helped raise €50 million, which is used to invest in off plan developments in Bulgaria, namely Sofia. Our fund management team will be involved in further proposed property funds launches this year as we have found that there is client demand for alternative investments with higher than average rates of return.
What is unusual or particularly attractive about your service?
Stavros Loizou: Our personal service! Our mission statement is 'offering an institutional level of service to every investor'. Each client has a dedicated broker who understands his risk profile and advises accordingly. We believe we differ from conventional brokers in that we advise on all asset classes under one roof from equities, CFDs, futures, options, foreign exchange and spread betting.
What types of client do you aim to attract?
Stavros Loizou: Our product range is designed to cater for all types of clients whether private, corporate or institutional. We tend to find that being able to offer advice on such a diverse product base has attracted clients who take investing seriously. We are also attracting clients who prefer a more bespoke service and alternative products.
What levels of advice do you offer investors?
Stavros Loizou: Most of our advisory brokers come from an institutional background, so the advice is of a high calibre. The advice is also quite specific - for example, if a broker has a client trading in equities who wishes to trade FX we will pass the client to an in-house FX specialist. Hence the client will have one central broker but may speak with others who are specialists in that specific product.
What portfolio management and financial planning services do you provide and how have they performed?
We offer portfolio management with no real lower limit. However, our view is that £100,000 is required to benefit from portfolio optimisation, which includes diversification. Since we began the programme in 2002, we have comfortably outperformed the FTSE100 Index and always been positive.
As I mentioned, we also manage a Bulgarian Property Fund, which is listed on the AIM as The Lewis Charles Sofia Property Fund (code LCSS). For investors with a slightly riskier appetite and for whom it is suitable, we also manage offshore hedge funds that trade derivatives and foreign exchange. Our focus on alternative asset classes has proved very popular and refreshing with our client base.
Do you offer tax-efficient vehicles such as ISAs and SIPPs?
Some clients like the flexibility to manage the investments in their own pension and Lewis Charles can assist clients in establishing SIPPs. We offer discretionary management for those who prefer to leave the investment decisions to us. We also utilise the expertise of institutional investment houses and can offer managed SIPPs through UBS Warburg.
We can place client investments under the tax efficient wrapper of an ISA or existing PEP through our close alliance with an approved PEP and ISA manager.
In which asset classes and markets do you act as a broker?
Andy Charalambous: Most major assets classes including global equities, bonds, currencies, CFDs, futures & options and spread betting. We can offer various service levels depending on the requirements of the client.
To what extent are you able to deal in overseas shares?
Andy Charalambous: We have access to all major markets around the world. However, being a London Stock Exchange member gives us an advantage - not just in terms of seeking competitive pricing, but also in providing advice.
What research, analysis and information services do you offer clients?
Andy Charalambous: We provide fundamental research on companies that we sponsor. We believe this is a key service for our clients, as well as for the exposure of the companies for whom we act. Importantly, rather than covering a wide spectrum of stocks we are focusing on a smaller number of companies but with greater in-depth analysis - effectively providing our clients with institutional-quality research. We can also cater to specific client requests to provide both short-term and longer-term views on a company's prospects.
How do you go about rating specific stocks? Do clients receive information on all your ratings?
Andy Charalambous: We rate each stock either as a Buy, Speculative Buy reflecting a higher risk profile, Neutral or Sell. We wanted to keep it as simple as possible whereby each rating reflects a defined expectation of price performance over the next year. Clients have access to all our fundamental research and we can provide it in the form they wish - either downloadable, via email or even post. It's up to them. We also recommend stocks on a more short-term basis for those clients that have expressed a higher-risk strategy. Our brokers communicate these views directly to our clients on a daily basis.
What types of company do you research?
Andy Charalambous: Ideally we look for small companies that have exciting and proven products or services. Most of our focus is on the Alternative Investment Market, as this is where we can add value. There are so many companies on this market that do not have adequate research coverage and lack exposure, and yet provide significant investment opportunities. Of course, we also look at some main market and FTSE100 stocks.
Do you take a qualitative or quantitative approach or a mixture of both?
Andy Charalambous: Both. For longer-term investors who look for value, we offer in-depth research with detailed valuation conclusions. For these we stay in regular contact with management to keep abreast of latest developments. Shorter term investors receive technical analysis, which includes charting and entry and exit levels.
How easy is it to open an account? How much do I have to invest?
Andy Charalambous: Opening an account is very straightforward. Simply complete our standard application form and provide personal identification to comply with money laundering regulations and, subject to the above requirements being complete, accounts can be opened in the same day.
Can I deal by telephone or online? If both, which do you prefer and is there a cost difference?
Andy Charalambous: Clients can deal either by telephone or online depending on the level of service they require. For clients that are less experienced or prefer a more personal touch, we are pleased to offer advice and recommendations. This level of service carries a higher charge but clients may find this to be a more beneficial way of managing their investments.
Are you able to get me inside the spread on smaller-cap stocks?
Andy Charalambous: Due to our relationship with various market makers we often get price improvements via telephone and RSP online trading. We also match up buyers and sellers whenever we can hence giving both sides of the transaction a much better price.
Why would I use Lewis Charles in preference to other brokers?
Stavros Loizou: Andy and I have between us over 35years of experience gained working in the financial markets. We have identified the areas of speciality that have worked well for us and so we have simply sought to replicate this for our clients. By using Lewis Charles, clients will find our professional and personal approach in delivering an institutional level of service to every client refreshing.